Vermont is on a path to become the first state in the nation to have a government-run health care monopoly, as a result of a health care bill signed Democrat by Gov. Peter Shumlin in May.

‘A Plan to Plan’

The new law creates a five-member board at an estimated cost of $1.3 million with unprecedented powers over health care, which constitutes 20 percent of the state’s economy. All 620,000 of the state’s residents would be eligible for coverage under the system, which proponents claim would be cheaper than the current patchwork of insurers.

The law calls for dozens of new studies intended to inform decision-makers in the new regulatory board to be formed later this year, plus a health care exchange with limited consumer choices. It could be up to six years before such changes are implemented, says Darcie Johnston, executive director of Vermonters for Health Care Freedom.

“The legislation is very generic, without a lot of meat on it. However, it does turn over control of health care in the state of Vermont to an unelected, unaccountable five-man board and allows them to tear down the current private health care system and replace it with a new, state-run system based on single-payer ideas,” says Johnston. “The board will be appointed in late August and begin planning the reform, but they don’t have to start implementing it until January 2013, well after the election.”

The new law leaves unanswered several basic questions, including what benefits would be provided, who would pay, who would be exempt, and how much would it cost employers and individual Vermonters, says Pat McDonald, chairwoman of the Vermont Republican Party.

“It’s nothing more than a plan to plan,” McDonald says.

Cost Burden Unclear

A key question for the state is the cost of the plan, an issue on which there are few answers.

“Gov. Shumlin hasn’t answered any questions about how much this plan will cost, who will be covered, and how doctors will be paid. We’re all wondering how this thing will be paid for,” said Johnston. “One study from Harvard is the closest thing the governor has to a financing plan for single-payer health care in Vermont. The researchers conclude that we’d need an additional 4 percent payroll tax from employees and an 11 percent payroll tax increase from employers. For now, this excludes ERISA and the self-insured from the pool.”

Johnston says the lack of clarity should have given the legislature pause.

“By signing this bill, the Vermont legislature has given up all authority over health care except financing. By the time this thing comes back from the board to be implemented, the three private health insurance companies—BlueCross BlueShield, SIGMA and MVP—will have been driven from the state of Vermont,” Johnston predicts.

Advocates Targeted State

Johnston says single-payer advocates targeted Vermont from the beginning as a state where their effort could succeed.

“Vermont’s population is small, homogenous, and relatively prosperous, but when Hillary Clinton pushed her plan in the 1990s, analysis showed that for a single-payer system to succeed, you’d need a minimum population of 1.5 million participants. Vermont doesn’t even come close. At most, the state would have only 400,000 in the pool, so I think it would collapse under its own weight,” explains Johnston.

Robert Zirkelbach, press secretary for America's Health Insurance Plans (AHIP), says the new system has to overcome several hurdles before implementation.

“Vermont hasn’t worked anything out yet. The state hasn’t even figured out how they’re going to finance this. No matter what happens, the costs are still there whether individuals are paying for health insurance premiums or the state pays for it with taxes. The costs are not going away,” says Zirkelbach.

‘A Terrible Path’

Vermont is going down “a terrible path,” says Sally Pipes, president and chief executive officer of the Pacific Research Institute.

“We can expect a doctor shortage in Vermont’s future. Already, doctors have retired early and others are planning on closing their practices in anticipation of ObamaCare. We’ll see the same thing there as a generation decides not to go into medicine because they don’t want to become civil servants,” says Pipes. “Businesses forced to bear the cost will not expand, some will leave, and the state will have trouble attracting new ones. This will decrease the tax base at a time when the demands on health care there are becoming greater. And if the businesses go, then the taxpayers will have to pick up the bill,”

She points to Canada as an example of the problems of monopolistic government-run approaches.

“I grew up in Canada, where they have government-run health care, and I saw what it did there. People have trouble seeing doctors, the lines for treatment are long and it hurts the economy,” Pipes said. “In Canada, they pay 10.4 percent of gross domestic product (GDP) for health care. That’s what the country has decided it can afford, and that’s why it takes 18.2 weeks to get treatment from a specialist. Some 17 percent of Canadians are waiting to see a primary care doctor because no one wants to be a primary care doctor—they are paid the least out of all physicians there.”

Pipes says the cost problem is just one of the concerns about Vermont’s plan.

“By telling the people that the government-run health care is ‘free,’ they will overutilize it since they don’t pay directly. This will cause the state to ration health care, increase taxes, and institute price controls to offset the increased demand,” Pipes says. “I hope this doesn’t foreshadow what’s in store for the rest of America.”